Sagar Mal Jain, BHILWARA V. ITO, CHITTORGARH

ITA 409/JODH/2010

• Counselvise Citation: 40923314 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-12-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 29-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURESH CHANDRA AGARWAL
• Section: 147; 148

Judgement Text

1 ITA 409(5)-10 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH SMC JODHPUR. ( BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER ) ITA NO.409, 424, 425, 426 & 427/JODH/2010 ASSTT. YEAR : 2001-02, 02-03, 03-04, 04-05 & 0 5-06. SHRI SAGAR MAL JAIN, VS. THE INCOME-TAX OFFICER , BEGUN, DISTT. CHITTORGARH. WARD 3, CHITTORGARH. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SURESH CHANDRA AGARWAL RESPONDENT BY : SHRI MAHESH KUMAR DATE OF HEARING : 01.12.2011 DATE OF PRONOUNCEMENT : 09.12.2011. ORDER DATED : 09.12.2011. ALL THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEARS 2001-02, 02-03, 03-04, 04-05 & 05-06. 2. THE FIRST COMMON GROUND IN ALL THESE APPEALS IS REGARDING LATE FILING OF THE APPEALS BY 30 DAYS. THE REASON FOR FILING THE APPEAL LATE WAS THAT ASSESSEE FELL ILL AND, THEREFORE, HE COULD NOT FILE THE APPEAL IN TIME. MEDICAL CERT IFICATE ALONG WITH AFFIDAVIT OF THE ASSESSEE ARE PLACED ON RECORD. 3. AFTER CONSIDERING THE CONTENTS OF THE AFFIDAVIT AND MEDICAL CERTIFICATE, I AM OF THE VIEW THAT THERE WAS A BONAFIDE AND A REASONABLE CAU SE FOR FILING THE APPEAL LATE BY 30 DAYS OR SO. ACCORDINGLY, I CONDONE THE DELAY IN FI LING THE APPEAL LATE. 2 4. THE MAIN EFFECTIVE GROUND IN APPEALS IS AGAINST INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE IT ACT. THE COPIES OF REASO NS RECORDED BY ASSESSING OFFICER ARE PLACED IN THE PAPER BOOK AT PAGES 5 TO 9. FOR ASSE SSMENT YEAR 2001-02 TO 04-05, THE ASSESSING OFFICER HAS RECORDED IDENTICAL REASONS BY MENTIONING FOUR YEARS. WHILE RECORDING THE REASONS, THE ASSESSING OFFICER HAS ME NTIONED THAT FOR ASSESSMENT YEAR 2006-07 THE ASSESSEE HAS SHOWN SALES AT RS. 39,40,0 00/- AND KEEPING IN VIEW THE BUSINESS TREND IN MIND, THE SALE FOR PRECEDING FIVE YEARS SH OULD BE TAKEN AT 10% LESS OF THE SALE FIGURE SHOWN FOR ASSESSMENT YEAR 2006-07. THE CHAR T OF ESTIMATED TURNOVER HAS BEEN GIVEN BY THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2001-02 TO 04-05 WHEREBY THE ESTIMATED TURN OVER IS MENTIONED AND PROFIT UNDER S ECTION 44AF IS ALSO SHOWN. ACCORDINGLY, THE ASSESSING OFFICER DREW AN INFERENC E THAT ASSESSEE MUST HAVE DONE BUSINESS ACTIVITY TO THE EXTENT TURNOVER SHOWN IN T HE CHART AND ASSESSEE HAS NOT FILED ANY RETURN OF INCOME. THEREFORE, INCOME HAS ESCAPED AS SESSMENT. ACCORDINGLY HE REQUESTED FOR PERMISSION FOR REOPENING OF THE ASSESSMENT FOR THESE FOUR YEARS AND, THEREFORE, ON RECEIVING APPROVAL, NOTICE UNDER SECTION 148 WAS IS SUED ON THE ASSESSEE. SIMILARLY FOR ASSESSMENT YEAR 2005-06 THE ASSESSING OFFICER NOTIC ED THAT ASSESSEE HAS ALSO CAPITAL BALANCE OF RS. 5,46,547/- AND TAKING INTO CONSIDERA TION THE PROFIT ON THE SALES SHOWN, THIS MUCH CAPITAL CANNOT BE THERE. THEREFORE, HE WAS OF THE VIEW THAT IN CAPITAL ACCOUNT THE ASSESSEE HAS SHOWN OPENING CAPITAL ON HIGHER SIDE. REGARDING TURNOVER OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT FOR ASSESSMENT YEAR 2006-07 THE ASSESSEE HAS SHOWN TURNOVER OF RS. 39.40 LACS AND IF 10% REDUCTION IS ALLOWED FOR 2005-06 THEN THERE SHOULD BE TURNOVER OF RS. 35.81 LACS OR SO AND IF PROFIT I S APPLIED @ 5% UNDER SECTION 44AF, THEN INCOME OF RS. 1,79,090/- HAS ESCAPED ASSESSMENT. T HEREFORE, NOTICE UNDER SECTION 148 3 WAS ISSUED ON THE ASSESSEE FOR THIS YEAR ALSO. THE REAFTER ASSESSMENT PROCEEDINGS WERE STARTED AND ASSESSMENTS WERE COMPLETED BY MAKING MI NOR ADDITIONS ON ACCOUNT OF TURNOVER OF THE ASSESSEE AND ON ACCOUNT OF CAPITAL ACCOUNT FOR ALL THE FIVE YEARS. 5. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) WHE RE REOPENING OF THE ASSESSMENT WAS CHALLENGED AND ADDITION MADE ON MERIT WAS ALSO CHALLENGED. HOWEVER, LD. CIT (A) REJECTED THE APPEAL OF THE ASSESSEE BY PASSING A CO NSOLIDATED ORDER FOR ALL THE FIVE YEARS. 6. NOW THE ASSESSEE IS IN APPEAL HERE BEFORE THE TR IBUNAL. 7. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS. 8. ON THE OTHER HAND, THE LD. D/R HAS PLACED RELIAN CE ON THE ORDERS OF THE AUTHORITIES BELOW. 9. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, I FIND THAT ASSESSEE DESERVES TO SUCCEED ON LEGAL GROUND ITSELF . I HAVE NOTED THAT THERE IS NO FIRM VIEW OF THE ASSESSING OFFICER THAT ANY ASSESSMENT H AS ESCAPED. THE ASSESSING OFFICER HAS JUST GUESSED THAT IF TURNOVER OF THE ASSESSEE F OR A.Y. 2006-07 IS OF RS. 39.40 LACS, THEN TURNOVER FOR THE PRECEDING YEARS MUST BE LESS BY 10% OF THE TURNOVER SHOWN IN THE ASSESSMENT YEAR 2006-07. ON THIS BASIS, WHICH IS P URELY A GUESS, PROCEEDINGS UNDER SECTION 147/148 CANNOT BE INVOKED. PROVISIONS OF S ECTION 147 ARE VERY CLEAR BY WHICH IT IS PROVIDED THAT ANY INCOME WHICH HAS ESCAPED ASSES SMENT, THERE MUST BE SOME CONCRETE EVIDENCE TO FORM THE VIEW THAT ANY INCOME AS ESCAPE D. THERE IS NO INFORMATION WITH THE ASSESSING OFFICER AT ALL THAT THERE MUST BE TURNOVE R OF THE ASSESSEE OF RS. 35.81 LACS, RS. 32.56 LACS, RS. 29.60 LACS, RS. 26.91 LACS AND RS. 26.46 LACS FOR ASSESSMENT YEAR 2005-06 TO 2001-02 RESPECTIVELY. THESE FIGURES HAVE BEEN T AKEN BY THE ASSESSING OFFICER ON ESTIMATION ONLY. THE ASSESSING OFFICER FOUND THAT I F TURNOVER OF THE ASSESSEE FOR 4 ASSESSMENT YEAR 2006-07 IS RS. 39.40 LACS, THEN THE RE MUST BE TURNOVER LESS BY 10% IN EACH PRECEDING ASSESSMENT YEARS. IN MY CONSIDERED VIEW THE BASIS ON WHICH THE PROCEEDINGS HAS BEEN STARTED BY THE ASSESSING OFFIC ER ARE NOT SUCH CORRECT BASIS ON WHICH PROCEEDINGS UNDER SECTION 147/148 CAN BE INVOKED. 9.1. IT IS FURTHER SEEN THAT EVEN FOR ASSESSMENT YE ARS 2001-02 AND 02-03 THE ASSESSEE HAD FILED HIS RETURN OF INCOME ON 29.11.2001 AND ON 31.3.3003 RESPECTIVELY. COPIES OF THESE RETURNS ARE PLACED AT PAGES2 & 4 OF THE PAPER BOOK. THEREFORE, IT IS WRONG ON THE PART OF THE ASSESSING OFFICER IN MENTIONING THAT AS SESSEE HAS NOT FILED ANY INCOME-TAX RETURN FOR ASSESSMENT YEARS 2001-02 AND 02-03. ASS ESSEE HAS FILED HIS RETURN, HAS DECLARED IN THE TURNOVER ON THE BASIS OF REGULAR BO OKS OF ACCOUNT. THE RETURN FOR ASSESSMENT YEARS 2003-04 TO 05-06 WERE NOT FILED AS THE INCOME OF THE ASSESSEE WAS BELOW TAXABLE. IF THERE IS NO RETURN, EVEN THEN TH ERE MUST BE SOME INFORMATION FROM WHICH IT CAN BE ASCERTAINED THAT ANY INCOME HAS ESC APED ASSESSMENT WHICH WAS NOT THERE IN CASE OF THE ASSESSEE FOR THESE YEARS. REGARDING OPENING CAPITAL FOR ASSESSMENT YEAR 2005-06, THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNT AND CAPITAL ACCOUNT FROM ASSESSMENT YEAR 2000-01 IS PREPARED AND WHATEVER TH E CAPITAL WAS THERE THAT HAS BEEN SHOWN AS OPENING CAPITAL AS ON 1.4.2005. THEREFORE, THIS IS ALSO WRONG ON THE PART OF THE ASSESSING OFFICER THAT ASSESSEE HAS NOT SHOWN PROPE R CAPITAL ACCOUNT. THERE IS NO PROPER INFORMATION WITH HIM IN RESPECT OF THIS ALSO. IN V IEW OF THESE FACTS AND CIRCUMSTANCES, I HOLD THAT REOPENING OF THE ASSESSMENT WAS VOID ABIN ITIO AND ACCORDINGLY I QUASH THE ASSESSMENT FOR ALL THE FIVE YEARS. SINCE I HAVE QU ASHED THE ASSESSMENT, THEREFORE, I AM NOT INCLINED TO DISPOSE OFF THE GROUNDS ON MERIT. 10. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. 5 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 .12.2011. SD/- ( R.K. GUPTA ) JUDICIAL MEMBER JODHPUR, COPY FORWARDED TO :- SHRI SAGAR MAL JAIN, CHITTORGARH. THE ITO WARD-3, CHITTORGARH. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 409(5)/JODH/2010) BY ORDER, AR ITAT JODHPUR.